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1 Contents Preface xxiii 1 OVERVIEW Introduction Understanding Project Management Defining Project Success Success, Trade-Offs, and Competing Constraints The Project Manager Line Manager Interface Defining the Project Manager s Role Defining the Functional Manager s Role Defining the Functional Employee s Role Defining the Executive s Role Working with Executives Committee Sponsorship/Governance The Project Manager as the Planning Agent Project Champions The Downside of Project Management Project-Driven versus Non Project-Driven Organizations Marketing in the Project-Driven Organization Classification of Projects Location of the Project Manager Differing Views of Project Management Public-Sector Project Management International Project Management Concurrent Engineering: A Project Management Approach Added Value Studying Tips for the PMI Project Management Certification Exam 40 Problems 42 COPYRIGHTED MATERIAL Williams Machine Tool Company 44 vii

2 viii CONTENTS 2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS Introduction General Systems Management Project Management: Project Management: Project Management: Resistance to Change Systems, Programs, and Projects: A Definition Product versus Project Management: A Definition Maturity and Excellence: A Definition Informal Project Management: A Definition The Many Faces of Success The Many Faces of Failure The Stage-Gate Process Project Life Cycles Gate Review Meetings (Project Closure) Engagement Project Management Project Management Methodologies: A Definition Enterprise Project Management Methodologies Methodologies Can Fail Organizational Change Management and Corporate Cultures Project Management Intellectual Property Systems Thinking Studying Tips for the PMI Project Management Certification Exam 104 Problems 107 Creating a Methodology ORGANIZATIONAL STRUCTURES Introduction Organizational Work Flow Traditional (Classical) Organization Developing Work Integration Positions Line-Staff Organization (Project Coordinator) Pure Product (Projectized) Organization Matrix Organizational Form Modification of Matrix Structures The Strong, Weak, or Balanced Matrix Center for Project Management Expertise Matrix Layering 137

3 Contents ix 3.11 Selecting the Organizational Form Structuring the Small Company Strategic Business Unit (SBU) Project Management Transitional Management Barriers to Implementing Project Management in Emerging Markets Seven Fallacies that Delay Project Management Maturity Studying Tips for the PMI Project Management Certification Exam 159 Problems 161 Case Studies Jones and Shephard Accountants, Inc. 166 Coronado Communications ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM Introduction The Staffing Environment Selecting the Project Manager: An Executive Decision Skill Requirements for Project and Program Managers Special Cases in Project Manager Selection Selecting the Wrong Project Manager Next Generation Project Managers Duties and Job Descriptions The Organizational Staffing Process The Project Office The Functional Team The Project Organizational Chart Special Problems Selecting the Project Management Implementation Team Mistakes Made by Inexperienced Project Managers Studying Tips for the PMI Project Management Certification Exam 214 Problems MANAGEMENT FUNCTIONS Introduction Controlling Directing Project Authority Interpersonal Influences Barriers to Project Team Development Suggestions for Handling the Newly Formed Team 243

4 x CONTENTS 5.7 Team Building as an Ongoing Process Dysfunctions of a Team Leadership in a Project Environment Life-Cycle Leadership Value-Based Project Leadership Organizational Impact Employee Manager Problems Management Pitfalls Communications Project Review Meetings Project Management Bottlenecks Cross-Cutting Skills Active Listening Project Problem-Solving Brainstorming Project Decision-Making Predicting the Outcome of a Decision Facilitation Handling Negative Team Dynamics Communication Traps Proverbs and Laws Human Behavior Education Management Policies and Procedures Studying Tips for the PMI Project Management Certification Exam 313 Problems 318 Case Studies The Trophy Project 327 Communication Failures 329 McRoy Aerospace 332 The Poor Worker 333 The Prima Donna 334 The Team Meeting 335 Leadership Effectiveness (A) 337 Leadership Effectiveness (B) 341 Motivational Questionnaire MANAGEMENT OF YOUR TIME AND STRESS Introduction Understanding Time Management Time Robbers Time Management Forms 358

5 Contents xi 6.4 Effective Time Management Stress and Burnout Studying Tips for the PMI Project Management Certification Exam 362 Problems 363 The Reluctant Workers CONFLICTS Introduction Objectives The Conflict Environment Types of Conflicts Conflict Resolution Understanding Superior, Subordinate, and Functional Conflicts The Management of Conflicts Conflict Resolution Modes Studying Tips for the PMI Project Management Certification Exam 377 Problems 379 Case Studies Facilities Scheduling at Mayer Manufacturing 382 Telestar International 383 Handling Conflict in Project Management SPECIAL TOPICS Introduction Performance Measurement Financial Compensation and Rewards Critical Issues with Rewarding Project Teams Effective Project Management in the Small Business Organization Mega Projects Morality, Ethics, and the Corporate Culture Professional Responsibilities Internal Partnerships External Partnerships Training and Education Integrated Product/Project Teams Virtual Project Teams Breakthrough Projects 427

6 xii CONTENTS 8.14 Managing Innovation Projects Agile Project Management Studying Tips for the PMI Project Management Certification Exam 431 Problems 437 Is It Fraud? THE VARIABLES FOR SUCCESS Introduction Predicting Project Success Project Management Effectiveness Expectations Lessons Learned Understanding Best Practices Best Practices versus Proven Practices Studying Tips for the PMI Project Management Certification Exam 459 Problems 460 Radiance International WORKING WITH EXECUTIVES Introduction The Project Sponsor Handling Disagreements with the Sponsor The Collective Belief The Exit Champion The In-House Representatives Stakeholder Relations Management Politics Studying Tips for the PMI Project Management Certification Exam 487 Problems 488 Case Studies Corwin Corporation 491 The Prioritization of Projects 499 The Irresponsible Sponsors 500 Selling Executives on Project Management 502

7 Contents xiii 11 PLANNING Introduction Validating the Assumptions Validating the Objectives General Planning Life-Cycle Phases Proposal Preparation Kickoff Meetings Understanding Participants Roles Project Planning The Statement of Work Project Specifications Milestone Schedules Work Breakdown Structure WBS Decomposition Problems Work Breakdown Structure Dictionary Role of the Executive in Project Selection Role of the Executive in Planning The Planning Cycle Work Planning Authorization Why Do Plans Fail? Stopping Projects Handling Project Phaseouts and Transfers Detailed Schedules and Charts Master Production Scheduling Project Plan Total Project Planning The Project Charter Project Baselines Verification and Validation Requirements Traceability Matrix Management Control The Project Manager Line Manager Interface Fast-Tracking Configuration Management Enterprise Project Management Methodologies Project Audits Studying Tips for the PMI Project Management Certification Exam 583 Problems NETWORK SCHEDULING TECHNIQUES Introduction Network Fundamentals 600

8 xiv CONTENTS 12.2 Graphical Evaluation and Review Technique (GERT) Dependencies Slack Time Network Replanning Estimating Activity Time Estimating Total Project Time Total PERT/CPM Planning Crash Times PERT/CPM Problem Areas Alternative PERT/CPM Models Precedence Networks Lag Scheduling Problems The Myths of Schedule Compression Understanding Project Management Software Software Features Offered Software Classification Implementation Problems Critical Chain Studying Tips for the PMI Project Management Certification Exam 640 Problems 643 Case Studies Crosby Manufacturing Corporation 656 The Invisible Sponsor PROJECT GRAPHICS Introduction Customer Reporting Bar (Gantt) Chart Other Conventional Presentation Techniques Logic Diagrams/Networks Studying Tips for the PMI Project Management Certification Exam 674 Problems PRICING AND ESTIMATING Introduction Global Pricing Strategies Types of Estimates Pricing Process Organizational Input Requirements Labor Distributions 686

9 Contents xv 14.6 Overhead Rates Materials/Support Costs Pricing Out the Work Smoothing Out Department Man-Hours The Pricing Review Procedure Systems Pricing Developing the Supporting/Backup Costs The Low-Bidder Dilemma Special Problems Estimating Pitfalls Estimating High-Risk Projects Project Risks The Disaster of Applying the 10 Percent Solution to Project Estimates Life-Cycle Costing (LCC) Logistics Support Economic Project Selection Criteria: Capital Budgeting Payback Period The Time Value of Money Net Present Value (NPV) Internal Rate of Return (IRR) Comparing IRR, NPV, and Payback Risk Analysis Capital Rationing Project Financing Studying Tips for the PMI Project Management Certification Exam 728 Problems 730 The Estimating Problem COST CONTROL Introduction Understanding Control The Operating Cycle Cost Account Codes Budgets The Earned Value Measurement System (EVMS) Variance and Earned Value The Cost Baseline Justifying the Costs The Cost Overrun Dilemma Recording Material Costs Using Earned Value Measurement The Material Accounting Criterion 782

10 xvi CONTENTS Material Variances: Price and Usage Summary Variances Status Reporting Cost Control Problems Project Management Information Systems Enterprise Resource Planning Project Metrics Key Performance Indicators Value-Based Metrics Dashboards and Scorecards Business Intelligence Infographics Studying Tips for the PMI Project Management Certification Exam 816 Problems 820 Case Studies The Bathtub Period 838 Franklin Electronics 839 Trouble in Paradise TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT Introduction Methodology for Trade-Off Analysis Contracts: Their Influence on Projects Industry Trade-Off Preferences Conclusion Studying Tips for the PMI Project Management Certification Exam RISK MANAGEMENT Introduction Definition of Risk Tolerance for Risk Definition of Risk Management Certainty, Risk, and Uncertainty Risk Management Process Plan Risk Management (11.1) Risk Identification (11.2) Risk Analysis (11.3, 11.4) Qualitative Risk Analysis (11.3) Quantitative Risk Analysis (11.4) Probability Distributions and the Monte Carlo Process Plan Risk Response (11.5) 913

11 Contents xvii Monitor and Control Risks (11.6) Some Implementation Considerations The Use of Lessons Learned Dependencies Between Risks The Impact of Risk Handling Measures Risk and Concurrent Engineering Studying Tips for the PMI Project Management Certification Exam 936 Problems 940 Case Studies Teloxy Engineering (A) 948 Teloxy Engineering (B) 948 The Risk Management Department LEARNING CURVES Introduction General Theory The Learning Curve Concept Graphic Representation Key Words Associated with Learning Curves The Cumulative Average Curve Sources of Experience Developing Slope Measures Unit Costs and Use of Midpoints Selection of Learning Curves Follow-On Orders Manufacturing Breaks Learning Curve Limitations Prices and Experience Competitive Weapon Studying Tips for the PMI Project Management Certification Exam 971 Problems CONTRACT MANAGEMENT Introduction Procurement Plan Procurements Conducting the Procurements Conduct Procurements: Request Seller Responses Conduct Procurements: Select Sellers Types of Contracts Incentive Contracts Contract Type versus Risk 994

12 xviii CONTENTS 19.9 Contract Administration Contract Closure Using a Checklist Proposal-Contractual Interaction Summary Studying Tips for the PMI Project Management Certification Exam 1004 Case Studies The Scheduling Dilemma 1009 To Bid or Not to Bid 1011 The Management Reserve QUALITY MANAGEMENT Introduction Definition of Quality The Quality Movement Comparison of the Quality Pioneers The Taguchi Approach The Malcolm Baldrige National Quality Award ISO Quality Management Concepts The Cost of Quality The Seven Quality Control Tools Process Capability (C P ) Acceptance Sampling Implementing Six Sigma Lean Six Sigma and DMAIC Quality Leadership Responsibility for Quality Quality Circles Just-In-Time Manufacturing (JIT) Total Quality Management (TQM) Studying Tips for the PMI Project Management Certification Exam MODERN DEVELOPMENTS IN PROJECT MANAGEMENT Introduction The Project Management Maturity Model (PMMM) Developing Effective Procedural Documentation Project Management Methodologies Continuous Improvement Capacity Planning Competency Models Managing Multiple Projects End-of-Phase Review Meetings 1085

13 Contents xix Honicker Corporation THE BUSINESS OF SCOPE CHANGES Introduction Need for Business Knowledge Timing of Scope Changes Business Need for a Scope Change Rationale for Not Approving a Scope Change 1094 Kemko Manufacturing THE PROJECT OFFICE Introduction Present-Day Project Office Implementation Risks Types of Project Offices Networking Project Management Offices Project Management Information Systems Dissemination of Information Mentoring Development of Standards and Templates Project Management Benchmarking Business Case Development Customized Training (Related to Project Management) Managing Stakeholder Relations Continuous Improvement Capacity Planning Risks of Using a Project Office Project Portfolio Management 1111 The Project Management Lawsuit MANAGING CRISIS PROJECTS Introduction Understanding Crisis Management Ford versus Firestone The Air France Concorde Crash Intel and the Pentium Chip The Russian Submarine Kursk The Tylenol Poisonings 1124

14 xx CONTENTS 24.7 Nestlé s Marketing of Infant Formula The Space Shuttle Challenger Disaster The Space Shuttle Columbia Disaster Victims Versus Villains Life-Cycle Phases Project Management Implications FUTURE OF PROJECT MANAGEMENT Changing Times Complex Projects Complexity Theory Scope Creep Project Health Checks Managing Troubled Projects THE RISE, FALL, AND RESURRECTION OF IRIDIUM: A PROJECT MANAGEMENT PERSPECTIVE Introduction Naming the Project Iridium Obtaining Executive Support Launching the Venture The Iridium System The Terrestrial and Space-Based Network Project Initiation: Developing the Business Case The Hidden Business Case Risk Management The Collective Belief The Exit Champion Iridium s Infancy Years Debt Financing The M-Star Project A New CEO Satellite Launches An Initial Public Offering (IPO) Signing Up Customers Iridium s Rapid Ascent Iridium s Rapid Descent The Iridium Flu Searching for a White Knight The Definition of Failure (October, 1999) The Satellite Deorbiting Plan Iridium is Rescued for $25 Million Iridium Begins to Grow 1194

15 Contents xxi Shareholder Lawsuits The Bankruptcy Court Ruling Autopsy Financial Impact of the Bankruptcy What Really Went Wrong? Lessons Learned Conclusion 1202 Appendix A. Solutions to the Project Management Conflict Exercise 1205 Appendix B. Solution to Leadership Exercise 1211 Appendix C. Dorale Products Case Studies 1217 Appendix D. Solutions to the Dorale Products Case Studies 1229 Appendix E. Alignment of the PMBOK Guide to the Text 1235 Author Index 1241 Subject Index 1243

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